Pre-Election Jobs Report May Stoke Voters’ Anger at Democrats

When President Ronald Reagan led his Republican Party into the 1982 midterm elections during what was then the worst recession since the Great Depression, the fact that his party lost only 26 U.S. House seats was characterized as a victory. President Barack Obama may not be so lucky.

Reagan’s party also retained its 54-vote majority in the Senate. The 10.4 percent unemployment rate on the eve of that election was almost a full percentage point higher than now and rising. By contrast, the nonpartisan Cook Political Report estimates that Obama’s Democrats this year will lose at least 40 seats in the House, costing the party control, and as many as nine of its 59 Senate seats.

Obama, 49, inherited an economy in crisis, and joblessness has barely budged from a 26-year high of 10.1 percent reached last October. With unemployment a top issue for voters, the jobs report that will be released today, the last before the Nov. 2 elections, is likely to show a worsening to 9.7 percent in September from 9.6 percent in August, according to a Bloomberg survey of economists.

“The Democrats’ dilemma right now comes back to the jobs report,” said Steve Jarding, a professor at Harvard University’s Kennedy School of Government and a Democratic strategist. “People are saying it just doesn’t seem to be getting any better.”

Presidential Election

And the picture isn’t likely to improve anytime soon: In the 2012 election year, when Obama would run for a second term, the unemployment rate will average 8.2 percent, according to the median estimate of economists surveyed by Bloomberg. It was 7.7 percent in January 2009, when the Democrat took office.

Reagan focused throughout 1982 on a consistent message: “Stay the course,” which he urged in speeches from his February budget message through campaign swings late into election season.

The Obama White House has alternated between celebrating improvements in economic indicators early in the year and calling for patience over the long run. While the administration has touted its $814 billion stimulus plan as the means to create jobs, its focus was distracted for much of the year by a drive to pass health-care legislation, the struggle over a financial- regulatory overhaul and the response to the BP Plc oil spill in the Gulf of Mexico.

‘Numbers Improved’

“In one month the numbers improved, they were trumpeting that, and the next month when they didn’t, they were talking about the long run,” said Chris Lehane, who was press secretary to former Vice President Al Gore’s 2000 presidential campaign.

Given the voter anger over the Obama-backed stimulus plan and the $700 billion bank bailout, the unemployment rate has become a measure of success for voters, Jarding said. In a Gallup poll conducted Sept. 13-16, 61 percent of respondents cited the economy or jobs as the most important problem facing the country.

White House Press Secretary Robert Gibbs said the economic crisis Obama inherited was greater in scale and complexity than the one Reagan confronted.

“The president has made decisions that, while they might not have been the most politically popular, they were what we had to do to stabilize our financial system, save the auto industry, and jump start the economy,” Gibbs said. “Now we’re seeing it begin to create jobs. We just need it to happen faster.”

‘Other People’s Money’

Republicans have seized on the job issue. Obama “doesn’t know how to create a job except his reliance on spending other people’s money and doing those things that a kind of socialized government would do,” former Republican vice presidential candidate Sarah Palin said on Fox News this week.

While stimulus spending on roads and transportation construction are identifiable through highway signs, much of the funding has gone to ventures that aren’t always visible to voters. That includes aid to state and local governments to prevent layoffs of government workers and funding for broadband access, clean-energy projects and electronic medical records.

“It creates the perfect storm for Republicans to come in and say, ‘They’re spending your money and you got nothing,” Jarding said.

The economic impact of the stimulus package peaked during the second quarter, according to the Congressional Budget Office. As a spring surge in payrolls was followed by slower job growth over the summer, Democrats focused on a new jobs message.

Additional Aid

Congress was mired in partisan fights on economic legislation: an extension of unemployment benefits passed in July, an aid package to stave off layoffs of local government workers was approved in August, and aid for small businesses passed in September.

In September, Obama called for new measures to promote jobs, including an infrastructure bank and business tax breaks.

The president regularly reminds voters that their economic problems started under his Republican predecessor, President George W. Bush. Republicans, he says, are like a person who has driven a car into a ditch and is demanding back the keys.

Obama has “at least muddied things with the ditch message enough to give Democrats the running room to turn the tables on Republicans” and hold down their losses, Lehane said.

--Editors: Max Berley, Mark McQuillan.

To contact the reporter on this story: Mike Dorning in Washington D.C. at mdorning@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva@bloomberg.net.